COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EC) No 883/2004 on the coordination of social security systems and regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004 (text with relevance for the EEA and Switzerland)
Date: 2016-12-13
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU Member State, care allowance, family benefit, non-working population, social security legislation, social-security harmonisation, unemployment insurance

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   EN 

   EUROPEAN COMMISSION  Strasbourg, 13.12.2016  SWD(2016) 461 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  amending Regulation (EC) No 883/2004 on the coordination of social security systems and regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004  (text with relevance for the EEA and Switzerland)  {COM(2016) 815 final} {SWD(2016) 460 final}  
 
 
Executive Summary Sheet 

Impact assessment on initiative to partially revise Regulation (EC) No  883/2004 of the European 
Parliament and of the Council on the coordination of social security systems and its implementing 
Regulation (EC) No 987/2009 

A. Need for action 

Why? What is the problem being addressed?  
The proposal concerns EU rules on coordination of social security on long-term care benefits; unemployment 
benefits; family benefits and access for economically inactive citizens to certain social benefits. 

For long-term care benefits, three problems were identified: (i) Lack of clarity for citizens and institutions; (ii) 
Lack of clarity in legal framework; (iii) Risk of losing benefits, or double payments. As a result, the cross-border 
coordination of long-term care benefits does not function efficiently. 1.8 million insured persons live in a Member 
State  other  than  the  one  where  they  are  insured  against  sickness.  Of  these,  45.000  use  in  kind  benefits  and 
35.000 use in cash benefits. The number of cross-border users of long-term care benefits will increase by 11% in 
2020 in comparison to 2013 and by 28% in 2030.  

For  unemployment  benefits  the  problems  concern:  (i)  divergent  application  of  aggregation  rules  by  Member 
States  (ii)  low  number  of  persons  exporting  their  unemployment  benefit  (iii)  the  inconsistent  treatment  of 
unemployed persons who reside in a different State from their former State of Work (frontier workers and other 
cross-border workers); (iv) unsatisfactory reimbursement rules. The consequences are inefficient processing of 
unemployment  benefits,  uneven  distribution  of  financial  burden  and  potential  barriers  for  unemployed  persons  
reintegrating into the labour market. In 2014, there were an estimated 91,700 unemployed cross-border workers 
53,800 of whom are frontier workers, approximately 25.000 aggregation cases and 27,300 cases of export were 
reported.    

For social benefits, the recent judgments in Cases C-140/12 Brey, C-133/13 Dano; and C-308/14 Commission 
v United Kingdom clarified that Member States may choose to limit equal treatment for special non-contributory 
cash  benefits  and  other  social  security  benefits  claimed  by  the  economically  inactive  citizens  to  the  extent 
permitted by the Free Movement Directive.  This jurisprudence is not reflected in the Regulation leading to a lack 
of transparency.  In 2014, there were an estimated 3.7 million economically inactive mobile EU citizens. Nearly 
80% derive rights (residence rights and/or rights to benefits) from economically active family members and who 
are therefore entitled to equal  treatment with the family members of national workers. The remaining 20% are 
affected by the current lack of clarity and transparency as regards their rights to claim benefits in their host state.  

For  export  of  family  benefits,  three  problems  were  identified:  i)  perceptions  of  unfairness  in  the  comparative 
purchasing power of exported family benefits  ii) the risk that the rules reduce incentives for parents to work and 
share child-raising responsibilities;  (iii) administrative difficulties in particular, awarding  certain types of benefits 
on  the  basis  of  derived  rights.  This  creates  challenges  for  public  authorities  and  has  potentially  negative 
consequences on families where one or both parents work in a different Member State to the State where their 
child resides. In 2013, on average 1% of child benefits were exported for 506 thousand children living in another 
Member State.   

What is this initiative expected to achieve?  

The  overall  objective  is  the  modernisation  by  ensuring  legal  clarity,  a  fair  and  equitable  distribution  of  the 
financial  burden  among  the  institutions  of  the  Member  States  involved  and  administrative  simplicity  and 
enforceability of the rules.  

The specific objectives for long-term care benefits are to: 
  Establish an appropriate stable regime, 
  Ensure even burden-sharing between Member States, 
  Provide legal clarity and transparency for citizens, institutions and other stakeholders. 

For unemployment benefits to: 
  Ensure a uniform and consistent application of the aggregation and calculation rules that reflects the degree 

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of integration of a worker in a Member State, 

  Ensure mobile EU workers are protected when they seek and take up work in another Member State,  
  Remove  the  distinction  between  frontier  workers  and  other  cross-border  workers  as  regards  the  State  in 

which they can claim the benefits, while promoting reintegration into the labour market,  

  Ensure  that  the  financial  burden  for  unemployment  benefits  is  distributed  between  Member  States  in 

proportion to the level of contributions or tax received and without a reimbursement mechanism, 

  Provide for a systematic and easy to administer cooperation and control mechanism to monitor the fulfilment 
of rights and obligations by the unemployed person residing in a Member State other than the one paying the 
benefits. 

For social benefits to: 
  Ensure legal clarity and transparency on the rights of workers, jobseekers and economically inactive mobile 
EU citizens, including the extent to which Member States’ social security institutions are permitted to limit the 
principle of equal treatment principle for access to social benefits. 

For family benefits to: 

  Ensure  a  clear  and  transparent  link  between  the  Member  State  issuing  family  benefits  and  the 

recipients,  

  Minimize barriers or disincentives to parents' ongoing participation in the labour market,  
  Ensure family benefits as processed as efficiently as possible.  

What is the value added of action at the EU level?  
Effective and efficient coordination needs to take account of changes in Member States' national social security 
and social changes. Action at EU level will ensure a uniform interpretation and protection of rights of mobile EU 
citizens and their family members that could not be achieved by Member States alone.  

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
For long-term care benefits, two legislative policy options (with 2 sub-options) were considered: 

1.  The  competent  Member  State  provides  long-term  care  benefits  in  cash  and  reimburses  the  cost  of 
benefits in kind provided by the Member State of residence (following the existing principles for sickness 
benefits with clarifications),  

2.  The  Member  State  of  residence  provides  all  long-term  care  benefits  with  reimbursement  by  the 
competent Member State 2a) no supplement by the competent Member State 2b) with supplement.  

Three  options  were  discarded:(1)  the  introduction  of  a  safeguarding  provision,  (2)  making  the  residence  State 
responsible  for  providing  all  long-term  care  benefits  without  reimbursement  and  (3)  making  the  competent 
Member State responsible for providing all long-term care benefits (export). 
Option 1 is the preferred option to ensure the stable application of the rules.  

For unemployment benefits: Three legislative policy options were considered to ensure the uniform application 
of the aggregation and calculation rules for unemployment benefits: 

1.  Aggregation after only one day of employment, 
2.  Aggregation after a period of  a)one or b)three months of employment, 
3.  Using  reference  earnings  received  in  Member  State  of  previous  employment  for  the  calculation  of 
unemployment  benefits  after  either  a)one  or  b)three  months  of  employment  in  the  competent  Member 
State,  

4.  horizontal option for the recognition of insurance periods for aggregation.  

The  preferred  option  2b  will  be  combined  with  an  obligation  for  the  Member  State  of  previous  employment  to 
provide unemployment benefits where this condition is not fulfilled and the horizontal option. This will ensure a 
minimum level of integration in the host Member State before entitlement to claim unemployment benefits and a 
consistent  approach  by  Member  States.    Further,  mobile  workers  will  be  protected  when  they  do  not  fulfil  this 
period in the Member State of last activity. 

Two  legislative  policy  options  were  considered  to  extend  the  minimum  period  for  an  export  of  unemployment 
benefits: 

1.  Extending  the  minimum  period  for  an  export  of  unemployment  benefits  from  three  to  six  months  with 

discretion to export the benefit for the whole period of entitlement,  

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2.  Extending the period of export of unemployment benefit to the whole period of entitlement, 

The  preferred  option  is  1  combined  with  a  reinforced  cooperation  mechanism  between  employment  services 
concerned to support cross-border job search. 

Three  legislative  policy  options  were  considered    for  unemployment  benefits  for  frontier  and  other  cross-
border workers: 

1.  Providing a choice for frontier workers as to where to claim unemployment benefits in the same way as 

for other cross-border workers, 

2.  Making  the  State  of  last  activity  responsible  for  the  payment  of  unemployment  benefits  with  the  sub-
options of a) requiring frontier workers to register with the employment service of the responsible State 
or b) giving them a choice between registering with the employment service of the competent State or 
their State of residence, 

3.  Making the State of last activity responsible for the payment of unemployment benefits when the frontier 
worker  worked  there  for  at  least  12  months  and  attributing  otherwise  the  responsibility  to  the  Member 
State of residence with the sub-options of a) requiring frontier workers to register with the employment 
service  of  the  responsible  State  or  b)  giving  them  a  choice  between  registering  with  the  employment 
service of the competent State or the State of residence. 

The preferred option 3a offers the best compromise as regards an equitable and administratively cost-effective 
burden sharing.  

For social benefits, the options contemplated1 have been legislative (amending the regulation):   

1.  a) Allowing a derogation to the equal treatment principle in Article 4 concerning social assistance only,  

b)  Allowing  a  derogation  to  the  equal  treatment  principle  in  Article  4  concerning  a  wider  array  of  tax 
financed benefits,  
c)  Allowing  a  precise  derogation  to  the  equal  treatment  principle  concerning  special  non-contributory 
cash benefits in Article 70;  

2.  Removing  special  non-contributory  cash  benefits  providing  subsistence  income  from  Regulation 

883/2004,  

3.  A non-legislative (clarifying the rules through a communication) has also been considered.  

In order to achieve the objective of ensuring legal clarity and transparency in the most efficient and effective way 
the preferred option is a combination of 1a and 1b. 

For family benefits, as an alternative to the status quo, two legislative options were considered concerning the 
link between the level of family benefits received and costs incurred:  

1. 

Indexation  of  exported  family  benefits  to  State  of  residence  of  the  child  a)upwards  &  downwards 
adjustment or b) downwards only,   

2.  State of residence has primary competence to pay family benefits.  

The option of removing the obligation to export family benefits was considered but discarded for legal reasons.   

In  addition,  a  horizontal  legislative  option  for  coordinating  child-raising  allowances  was  considered.  This  has 
three  variants  a)  individual  rights  for  salary-related  child-raising  allowances  with  mandatory  obligation  for  the 
secondary competent Member State to derogate from the anti-overlapping rules (i.e. pay the benefit in full), b) 
the  same  approach  as  (a)  but  for  all  child  raising  allowance  (salary-related  and  flat  rate)  and  c)  the  same 
approach as (b) but with an optional derogation from the anti-overlapping rules (i.e. a secondary competent state 
can  either  pay  in  full  or  pay  a  "top-up"  only  where  its  benefits  are  higher  than  the  State  with  primary 
competence).   

The preferred option is to maintain the status quo combined with horizontal option c. This combination ensures 
that primary responsibility for family benefits is retained by the Member State of economic activity where a parent 
pays taxes and social security contributions; this protects family members and upholds the best interests of the 

1  The  CJEU  ruling  308/14  Commission  v  United  Kingdom  has  affected  the  impact  assessment  of  alternative 
options. Following the judgment, Member States may make the access of economically inactive citizens both to 
social assistance and social security benefits subject to fulfilling the conditions of the Free Movement Directive. 
The  situation  is  different  for  jobseeker  whose  right  of  residence  is  conferred  directly  by  the  Treaty  on  the 
Functioning of the European Union. As this report was approved by the Regulatory Scrutiny Board prior to this 
judgment, the authors have not substantially revised the options or the analysis of their impact, which does not 
reflect this differentiated treatment of economically inactive citizens and jobseekers. 

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child. By introducing the horizontal option c, it is also possible to promote a balance between work and family life 
during periods of child-raising by placing a greater emphasis on individual rights and supporting those Member 
States who are actively promoting greater gender balance without imposing this obligation 

Who supports which option?  
For long-term care benefits, the Baseline Scenario (status quo) was supported by eight Member States2; two 
opposed  this  option.  increasing  social  protection  for  vulnerable  citizens  was  also  highlighted  as  a  concern  by 
NGOs and citizens. Option 1 gained most support from the Member States (16 in favour – none opposed). 
No Member States supported Option 2. 

For  unemployment  benefits  the  reaction  of  Member  States,  experts,  social  partners,  NGO’s  and  other 
stakeholders  was  mixed  and,  apart  from  the  horizontal  option,  there  was  no  clear  majority  in  favour  of  any 
option.  The majority of individual respondents to the public consultation favoured extending the export period for 
unemployment benefits and a right of choice for frontier workers. 

For  social  benefits,  11  Member  States  supported  amending  Article  4  of  Regulation  883/2004  to  allow 
derogations  for  social  assistance.  Two  Member  States  supported  removing  special  non-contributory  cash 
benefits from the Regulation. Four Member States favoured providing administrative guidance. Views from social 
partners were mixed some advocating stronger safeguards to protect social security systems from unreasonable 
burden others stressing the potential detrimental impacts on vulnerable citizens.  As these measures constitute 
codification of case law it did not form part of the public consultation.  

For family benefits, the baseline Scenario was supported by 17 out of 28 of Member States, NGOs and social 
partners representing workers were also in favour as was the majority of respondents in the public consultation. 
Option 1a and 1b received low support from Member States (four Member States were in favour of option a) and 
none for option b). Option 2 received support as first or second choice from 10 Member States, while the views 
of the NGOs, Social Partners and Public Consultation were mixed.  The Horizontal Options were developed in 
direct response to feedback from 4 Member States, the Council, the Parliament, the social partners, the Advisory 
Committee  on  Equal  Opportunities  for  Women  and  Men  and  other  stakeholders  on  the  need  for  more  flexible 
working  practices  to  support  parents.    As  they  were developed  later  in  the  consultation  process,  only  informal 
consultation took place. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
Long-term care benefits 
Option 1 brings greater legal certainty, transparency and stability of the regime. A separate Chapter categorising 
the rules for long-term care benefits will provide a clear distinction from the provisions on sickness benefits and 
social assistance. Citizens and institutions will benefit from this clarification. Implementation costs will be low as 
it  does  not  drastically  change  the  current  system.    By  facilitating  the  comparison  of  benefits  this  option  could 
reduce  disputes  between  institutions  and  save  time  and  money  spent  per  case.  It  is  also  coherent  with  the 
objective of increasing protection of persons in need of long-term care.  

Unemployment benefits 
The preferred options ensure a stronger link between the competent institutions and the claimant.  The proposal 
for frontier workers and the grant of a longer period of export are likely to facilitate labour market reintegration 
and thus have a positive impact on mobile workers; an overall positive impact is expected from the abolition of 
the reimbursement procedure. The extension of the export period will increase the chances for integration into 
the  Labour  Market,  but  have  no  direct  economic  impact,  as  the  export  period  never  exceeds  underlying 
entitlement. 

Social benefits 
The preferred option will clarify the rights of EU mobile citizens and facilitate informed choices by citizens. It may 
reduce  regulatory  costs  (litigation  costs  and  costs  on  legal  advice)  and  give  greater  visibility  to  the  existing 
safeguards  for  the  host  Member  State's  welfare  system,  while  preserving  citizens'  rights  when  exercising 
freedom of movement.   

2 Member States opinions expressed in the Administrative Commission for social security coordination 

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Family benefits 
The  impact  of  the  baseline  scenario  is  neutral.    The  horizontal option  c  may  remove  disincentives  for  working 
parents  to  share  child-raising  responsibilities.  Providing  that  benefits  may  only  be  awarded  on  the  basis  of 
individual entitlement will achieve a clear and transparent link between the Member State issuing the benefit and 
the  recipient.  It  will  also  simplify  procedures  thereby  decreasing  regulatory  costs  for  public  authorities  and 
reducing delays in processing claims.     

No impact is foreseen in relation to the initiative concerning environmental issues. 

What are the costs of the preferred option (if any, otherwise main ones)?  
Long-term care benefits 
Implementation costs are expected to be low and in the long term, it will save time and money spent per case by 
the Member States.  

Unemployment benefits 
The  preferred  option  for  the  aggregation  of  periods  and  the  calculation  of  benefits  is  unlikely  to  have  a 
substantial overall effect on expenditure. Based on the current rules, minor overall savings can be expected (€ 
29 m for the 23 reporting Member States).  
An extension of the minimum export period of unemployment benefits from 3 to 6 months will have no direct 
economic impact, as the period of export never exceeds the period of underlying entitlement to unemployment 
benefits.  
The  preferred  option  for  unemployment  benefits  for  frontier workers,  may  lead  to  a  slight  increase  of  overall 
payments (€ 442 m instead of € 416 m under the baseline scenario). 

Social benefits  
As codification of existing case law, no significant costs are expected. 

Family benefits 
The impact of the baseline scenario is neutral. The horizontal option c may mean that some parents lose existing 
entitlement on the basis of derived rights however, in light of the low levels of compliance among Member States 
with the requirement to grant derived rights in relation to child-raising allowances the impact is expected to be 
limited.  The horizontal option may also entail a negative economic impact as secondary competent Member 
States may pay more in benefits.   However, Member States will have a choice as to whether or not to disapply 
the anti-accumulation rules therefore any economic impact will be voluntary.  The optional nature of the 
derogation may reduce the beneficial impact of this change for working parents 

No negative impact is foreseen in relation to the initiative concerning environmental issues.   

How will businesses, SMEs and micro-enterprises be affected?  

No direct impact is expected for businesses, SMEs and micro-enterprises. 

Will there be significant impacts on national budgets and administrations?  
Long-term care benefits:  
N/A 

Unemployment benefits:  
N/A 

Social benefits: 
N/A 

Family Benefits: 
Horizontal options c may increase expenditure by the secondary competent Member State of on average 60%, 
however, Member States will have a choice as to whether or not to disapply the anti-overlapping rules. 

Will there be other significant impacts?  
Long-term care benefits 

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The  new  rules  will  contribute  to  a  smoother  coordination  of  long-term  care  benefits  and  hence  to  freedom  of 
movement  and  residence.  They  will  ensure  that  citizens,  with  care-needs  are  not  disadvantaged  in  exercising 
their right to free movement within the EU.  

Social benefits: 
The  option  gives  greater  visibility  to  the  existing  safeguards  in  EU  law  to  prevent  economically  inactive  Union 
citizens from using the host Member State's welfare system to fund their means of subsistence.  

Unemployment benefits 
The extension of the period of export will allow job seekers to make better use of the European labour market.  

Family benefits 
The horizontal options offer superior protection to fundamental rights in relation to the rights of the family (Article 
33(2)) to reconcile family and professional life.    

D. Follow up 

When will the policy be reviewed?  
The implementation progress of the revision will be evaluated by the Commission 5 years after the application of 
the revised legal framework.  

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